COVID ECONOMICS VETTED AND REAL-TIME PAPERS ECONOMIC EPIDEMIOLOGY: ISSUE 48 A REVIEW 10 SEPTEMBER 2020 David McAdams INDIVIDUALISM Bo Bian, Jingjing Li, Ting Xu FORECASTING THE SHOCK and Natasha Z. Foutz Felipe Meza ENTREPRENEUR DEBT AVERSION IS WHO TRUSTED? Mikael Paaso, Vesa Pursiainen Nirosha Elsem Varghese, Iryna and Sami Torstila Sabat, Sebastian Neuman‑Böhme, SUPPLY CHAIN DISRUPTION Jonas Schreyögg, Tom Stargardt, Matthias Meier and Eugenio Pinto Aleksandra Torbica, Job van Exel, PANDEMICS, POVERTY, AND Pedro Pita Barros and Werner Brouwer SOCIAL COHESION ECONOMISTS: FROM VILLAINS Remi Jedwab, Amjad M. Khan, Richard TO HEROES? Damania, Jason Russ and Esha D. Zaver Diane Coyle Covid Economics Vetted and Real-Time Papers Covid Economics, Vetted and Real-Time Papers, from CEPR, brings together formal investigations on the economic issues emanating from the Covid outbreak, based on explicit theory and/or empirical evidence, to improve the knowledge base. Founder: Beatrice Weder di Mauro, President of CEPR Editor: Charles Wyplosz, Graduate Institute Geneva and CEPR Contact: Submissions should be made at https://portal.cepr.org/call-papers- covid-economics. Other queries should be sent to [email protected]. Copyright for the papers appearing in this issue of Covid Economics: Vetted and Real-Time Papers is held by the individual authors. The Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Research (CEPR) is a network of over 1,500 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society. CEPR research may include views on policy, but the Trustees of the Centre do not give prior review to its publications. The opinions expressed in this report are those of the authors and not those of CEPR. Chair of the Board Sir Charlie Bean Founder and Honorary President Richard Portes President Beatrice Weder di Mauro Vice Presidents Maristella Botticini Ugo Panizza Philippe Martin Hélène Rey Chief Executive Officer Tessa Ogden Editorial Board Beatrice Weder di Mauro, CEPR Simon Johnson, MIT and CEPR Charles Wyplosz, Graduate Institute Geneva Sebnem Kalemli-Ozcan, University of and CEPR Maryland and CEPR Rik Frehen Viral V. Acharya, Stern School of Business, Tom Kompas, University of Melbourne and NYU and CEPR CEBRA Guido Alfani, Bocconi University and CEPR Miklós Koren, Central European University Franklin Allen, Imperial College Business and CEPR School and CEPR Anton Korinek, University of Virginia and Michele Belot, European University Institute CEPR and CEPR Michael Kuhn, Vienna Institute of David Bloom, Harvard T.H. Chan School of Demography Public Health Maarten Lindeboom, Vrije Universiteit Nick Bloom, Stanford University and CEPR Amsterdam Tito Boeri, Bocconi University and CEPR Philippe Martin, Sciences Po and CEPR Alison Booth, University of Essex and CEPR Warwick McKibbin, ANU College of Asia and Markus K Brunnermeier, Princeton the Pacific University and CEPR Kevin Hjortshøj O’Rourke, NYU Abu Dhabi Michael C Burda, Humboldt Universitaet zu and CEPR Berlin and CEPR Evi Pappa, European University Institute and Aline Bütikofer, Norwegian School of CEPR Economics Barbara Petrongolo, Queen Mary University, Luis Cabral, New York University and CEPR London, LSE and CEPR Paola Conconi, ECARES, Universite Libre de Richard Portes, London Business School and Bruxelles and CEPR CEPR Giancarlo Corsetti, University of Cambridge Carol Propper, Imperial College London and and CEPR CEPR Fiorella De Fiore, Bank for International Lucrezia Reichlin, London Business School Settlements and CEPR and CEPR Mathias Dewatripont, ECARES, Universite Ricardo Reis, London School of Economics Libre de Bruxelles and CEPR and CEPR Jonathan Dingel, University of Chicago Booth Hélène Rey, London Business School and School and CEPR CEPR Barry Eichengreen, University of California, Dominic Rohner, University of Lausanne and Berkeley and CEPR CEPR Simon J Evenett, University of St Gallen and Paola Sapienza, Northwestern University and CEPR CEPR Maryam Farboodi, MIT and CEPR Moritz Schularick, University of Bonn and Antonio Fatás, INSEAD Singapore and CEPR CEPR Francesco Giavazzi, Bocconi University and Flavio Toxvaerd, University of Cambridge CEPR Christoph Trebesch, Christian-Albrechts- Christian Gollier, Toulouse School of Universitaet zu Kiel and CEPR Economics and CEPR Karen-Helene Ulltveit-Moe, University of Timothy J. Hatton, University of Essex and Oslo and CEPR CEPR Jan C. van Ours, Erasmus University Ethan Ilzetzki, London School of Economics Rotterdam and CEPR and CEPR Thierry Verdier, Paris School of Economics Beata Javorcik, EBRD and CEPR and CEPR Ethics Covid Economics will feature high quality analyses of economic aspects of the health crisis. However, the pandemic also raises a number of complex ethical issues. Economists tend to think about trade-offs, in this case lives vs. costs, patient selection at a time of scarcity, and more. In the spirit of academic freedom, neither the Editors of Covid Economics nor CEPR take a stand on these issues and therefore do not bear any responsibility for views expressed in the articles. Submission to professional journals The following journals have indicated that they will accept submissions of papers featured in Covid Economics because they are working papers. Most expect revised versions. This list will be updated regularly. American Economic Review Journal of Economic Growth American Economic Review, Applied Journal of Economic Theory Economics Journal of the European Economic American Economic Review, Insights Association* American Economic Review, Journal of Finance Economic Policy Journal of Financial Economics American Economic Review, Journal of International Economics Macroeconomics Journal of Labor Economics* American Economic Review, Journal of Monetary Economics Microeconomics Journal of Public Economics American Journal of Health Journal of Public Finance and Public Economics Choice Canadian Journal of Economics Journal of Political Economy Econometrica* Journal of Population Economics Economic Journal Quarterly Journal of Economics* Economics of Disasters and Climate Review of Corporate Finance Studies* Change Review of Economics and Statistics International Economic Review Review of Economic Studies* Journal of Development Economics Review of Financial Studies Journal of Econometrics* (*) Must be a significantly revised and extended version of the paper featured in Covid Economics. Covid Economics Vetted and Real-Time Papers Issue 48, 10 September 2020 Contents Economic epidemiology in the wake of Covid-19 1 David McAdams Individualism during crises 46 Bo Bian, Jingjing Li, Ting Xu and Natasha Z. Foutz Entrepreneur debt aversion and financing decisions: Evidence from COVID-19 support programs 93 Mikael Paaso, Vesa Pursiainen and Sami Torstila Covid-19 supply chain disruptions 139 Matthias eierM and Eugenio Pinto Epidemics, poverty, and social cohesion: Lessons from the past and possible scenarios for COVID-19 171 Remi Jedwab, Amjad M. Khan, Richard Damania, Jason Russ and Esha D. Zaveri Forecasting the impact of the COVID-19 shock on the Mexican economy 210 Felipe Meza Risk communication during COVID-19: A descriptive study on familiarity with, adherence to and trust in the WHO preventive measures 226 Nirosha Elsem Varghese, Iryna Sabat, Sebastian Neuman-Böhme, Jonas Schreyögg, Tom Stargardt, Aleksandra Torbica, Job van Exel, Pedro Pita Barros and Werner Brouwer From villains to heroes? The economics profession and its response to the pandemic 242 Diane Coyle 1 Covid Economics Issue 48, 10 September 2020 Economic epidemiology in the wake of Covid-191 David McAdams2 Date submitted: 4 September 2020; Date accepted: 9 September 2020 Infectious diseases, ideas, new products, and other “infectants” spread in epidemic fashion through social contact. The Covid-19 pandemic, the proliferation of “fake news,” and the rise of antibiotic resistance have thrust economic epidemiology into the forefront of public-policy debate and re-invigorated the field. Focusing for concreteness on disease- causing pathogens, this paper provides a taxonomy of economic- epidemic models, emphasizing both the biology / immunology of the disease and the economics of the social context. An economic epidemic is one whose diffusion through the agent population is generated by agents' endogenous behavior. I highlight properties of the Nash-equilibrium epidemic trajectory and discuss ways in which public-health authorities can change the game for the better, (i) by imposing restrictions on agent activity to reduce the harm done during a viral outbreak and (ii) by enabling diagnostic-informed interventions to slow or even reverse the rise of antibiotic resistance. Covid Economics 48, 10 September 2020: 1-45 48, 10 September Covid Economics 1 I thank David Argente, Chris Avery, Troy Day, Mike Hoy, Gregor Jarosch, Philipp Kircher, Anton Korinek, Ramanan Laxminarayan, Tomas Philipson,